No ACA subsidies after military reserve retirement?

[tk2356]

My plan counted on retiring from the military reserves around age 42-43, then using ACA subsidies until full retirement benefits kick in around 57-58.

For the period between leaving the ready reserve (age 42-43) and receiving full retirement benefits (57-58), TRICARE offers a Retired Reserve program that costs $1083/month for the family. I assumed we could just turn that down and still qualify for ACA subsidies based on income levels, but just heard that merely having the option for the costly Retired Reserve program means that we won't qualify for any ACA subsidies.

Does anyone else have any experience with this, and is there a workaround? If true, this would set back our target date a while as we weren't expecting to have to shell out near that much for health care. @Nords your book was supremely informative, but I don't remember reading about this in there -- any insight would be appreciated!

[seattlecyclone]

No firsthand experience, but this page on the Tricare website suggests that someone who is eligible for the Retired Reserve coverage and chooses not to purchase it would then become eligible for premium assistance through the ACA marketplace.

[Nords]

... but just heard that merely having the option for the costly Retired Reserve program means that we won't qualify for any ACA subsidies.

Does anyone else have any experience with this, and is there a workaround? If true, this would set back our target date a while as we weren't expecting to have to shell out near that much for health care. @Nords your book was supremely informative, but I don't remember reading about this in there -- any insight would be appreciated!

Thank you, I'm glad the book was helpful in other areas!

As far as health insurance goes, no, as far as I can tell you're still eligible to claim any ACA subsidies for which anyone else in your financial situation would normally qualify.

I spend most of my research time trying to debunk "I've heard that", "I've been told that", and other scuttlebutt.  Without a credible link or some other reference, it's impossible to prove a negative.  If you've been told something, well, it's really hard to figure out whether we've missed a new press release on a major program change, or whether it's simply that the speaker didn't explain the issue correctly.

There's been a lot of discussion in Congress and the IRS about "eligibility" versus actually having the coverage.  For example, take a look at page 7 of this PDF from the Congressional Research Service, which links to the source:
https://fas.org/sgp/crs/misc/R41198.pdf
"Is a Person Who Is Eligible for VA Health Care or TRICARE, but Is Not Enrolled in Either Program, Eligible for the Health Insurance Premium Tax Credit?
A veteran (or certain beneficiaries) who is eligible for health care provided through the VA, but not actually enrolled in the VA health care system, may be eligible for premium tax credits (as long as they meet income and other requirements for obtaining the credit).  Similarly, TRICARE beneficiaries not actually enrolled in certain TRICARE programs may be eligible for the premium tax credit.
[...]
TRICARE beneficiaries who are eligible for, but not enrolled in, the Continued Health Care Benefit Program, TRICARE Retired Reserve, TRICARE Young Adult, and TRICARE Reserve Select programs may be eligible for the premium tax credit. Individuals who are enrolled in these programs are not eligible."

And from a research arm of an insurance company:
https://www.transamericacenterforhealthstudies.org/docs/default-source/default-document-library/tchs_veterans-graphic-layout_r7_081814.pdf?sfvrsn=4
"Veterans enrolled in VA care or TRICARE are not eligible for subsidies on Marketplace plans."

This implies that if you're not actually enrolled in (and paying for) TRR then you're eligible to enroll in (and be subsidized by) an ACA exchange policy.

The best way to confirm this information is to talk with Tricare directly (admittedly they're not very good at phone service) and to seek a reference from the call center or (as SeattleCyclone mentions) their website.  You might be able to accomplish the same from a Tricare ombudsman at a military hospital or a large military clinic.  You may even be able to do it from a Veteran Service Officer in your local VA clinic.

[tk2356]

Thanks for the links, @Nords, I feel much better now with that Congressional Research Service quote. I spoke with a rep from New York's Marketplace who told me that since my family will be eligible for a workplace insurance policy (tricare reserve retired), and it falls in the "affordable" range based on projected income, we wouldn't qualify for subsidies.

Would I just check no, then, when they ask about employer health care options available to us? I wouldn't technically consider myself their employee anymore at that point...   I'll call Tricare and see if they know! Thanks again for the help. You too, @seattlecyclone! Hopefully New York isn't an exception to the rule on this one.

[Nords]

Would I just check no, then, when they ask about employer health care options available to us? I wouldn't technically consider myself their employee anymore at that point...   

That's right, just check "No" since you're not actually insured with TRR.

You won't be a drilling Reservist, but technically being "retired awaiting pay" for the pension means that you're the type of employee on retainer, subject to recall during a total force mobilization.  (The last one of those was nearly 80 years ago for WWII.)  In exchange for your availability, when you reach age 60 your pension will be calculated based on the pay tables in effect during the year in which you turn age 60, and at the longevity of those pay tables as if you were on active duty the entire time you were in the gray area. 

Hopefully during the next few decades, military pay raises will keep up with the Employer Cost Index during that time (let alone the Consumer Price Index).  Your pension at age 60 would have about the same buying power as it would have had when you stopped drilling at age 42-43.

That's in federal law Title 10 U.S. Code section 1407(d)(1)(A):
https://www.law.cornell.edu/uscode/text/10/1407
“… the total amount of monthly basic pay to which the member or former member was entitled during the member or former member’s high-36 months (or to which the member or former member would have been entitled if the member or former member had served on active duty during the entire period of the member or former member’s high-36 months)…”

More details (like the DoD Financial Management Regulation rules) are in this post:
https://the-military-guide.com/national-guard-and-reserve-retirement-at-the-maximum-pay/
https://comptroller.defense.gov/Portals/45/documents/fmr/current/07b/07b_03.pdf

99.99% of retiring Guard/Reserve members choose "retired awaiting pay", but another option is "separated" or "discharged".  You wouldn't be subject to mobilization in the event of a total force mobilization, but your pension (still at age 60) would be based on the pay tables in effect on the date you filed for separation... and at your longevity of that date.  In other words it'd be eroded by at least 17 years of inflation before you reached age 60 and it started paying out.

[tk2356]

Ah good to know -- thanks Nords! I didn't even know there was a second option after drill. I'll post back on here after I get around to speaking with Tricare later this week to see if they say anything different than what you posted. Thanks again.